Yield a popular conversation with recent weather (Grain Marketing)

(Editor’s note: John Hall is a professional commodities analyst.)

The Sept. 12 USDA Supply and Demand update offered little surprise to the market. In corn, old crop ending stocks were reduced slightly from 1.457 billion bushels last month to 1.452 billion bushels.
The major change came in new crop planted acres. On Aug. 11, FSA released its first set of farmers’ data that was incorporated into the report. FSA’s data suggested 94.9 million acres of corn were planted.
This was an increase of 800,000 acres.
Yield has been the main talking point the last few weeks with the variable weather across the country. USDA started the year with a 181.5 trend line yield projection. With dryness in the western Corn Belt, they lowered the national projected yield to 173.8 bushels per acre.
Even with the yield reduction, total production for new crop increased from 15,111 billion bushels to 15,134 billion bushels with the increased acres.
The big issue facing corn is usage. Ethanol demand has dropped and export sales are down.
That said, ending stocks for new crop corn are projected at 2.221 billion bushels which would be a 7 year high. Allendale fears if these numbers hold the economic value for December corn could drop to $4.10.
The soybean story is a little brighter. In this report, old crop soybean ending stocks were lowered by 10 million bushels to 250 million bushels.
On Sept. 29 the quarterly Grain Stocks report will confirm the official count for old crop grain stocks as of Sept. 1.
New crop bean stocks were lowered from 245 million to 220 million. Acreage was increased slightly from 83.5 million to 83.6 million.
The USDA’s initial trend yields for soybeans was 52 bushels per acre for the nation. With the dry weather projected yield was cut to 50.1 bushels per acre in this report.
Total supply, production plus beginning stocks plus imports, is now 155 million bushels smaller than last year. This sounds great, right?
The problem is demand. The USDA lowered demand by 35 million bushels to 1.790 million.
Allendale analysts see challenges in the coming months. Brazil currently has a $23 per tonne price advantage for near term bookings. That widens to $53 for delivery in November.
It widens even more to $73, $1.99 per bushel, for December delivery. Competition and continued growth from Brazil is frightening.
Soybean availability at the ports in New Orleans may also be an issue.
Last Monday in St. Louis the stage height of the river was reported at -3.6 feet. Stream stage (also called stage or gage height) is the height of the water surface, in feet, above an established altitude where the stage is zero.
The zero level is arbitrary, but is often close to the stream bed. Last year the river low was reported on Dec. 31 down 4.4 feet. Back in the 2012 drought, on Dec. 24, it was down 3.5. Last Monday the river at Memphis was down 9.9 feet stage height. At the worst point last year on Oct. 22, it was down 10.8. This is an issue given our export season.
The next USDA report that could affect the market will be the Quarterly Stocks Report released on Sept. 29.
This report will document the official Sept. 1 count of old crop stocks.
You should also know that historically the seasonal low for December corn futures is Sept. 28 and Oct. 3 for November soybean futures.
The Russia-Ukraine war continues. I am sure you saw that Russia is now trying to buy weapons from North Korea.
Ukraine’s deputy prime minister reported that more than 100 port infrastructure facilities had been damaged in various attacks since Russia ended participation in the export deal.
It has been reported that the Russian navy now has 50 naval ships waiting outside the Danube River to monitor traffic.
It has been reported that they have destroyed five private cargo ships and threatened the use of nuclear weapons on the Danube River.
In addition, Russia has dumped their wheat on the market capturing all sales in that region.
Currently the world wheat market has not followed historical trends given these Russian actions.
In other news, retail level pricing, as measured by the Consumer Price Index, rose from up 3.2 percent in July to up 3.7 percent in August. At this moment, Allendale does not expect the Federal Reserve to increase interest rates at their meeting this week.
In closing, I wanted to share a chart for our young famers.
Last week Scott Irwin, University of Illinois, released a chart looking at U.S. farm debt.
For those of you that were farming in 1980, you know it was a very challenging period.
(Note: I research material from Allendale, DTN, USDA, University Land Grants and other credible sources in compiling this article. It is not merely my opinion, but rather a consensus of experts in the trade. Looking for a marketing coach or someone to discuss strategies with? Contact me at jehgrain@gmail.com, or call 410-708-878